If you are planning to put some extra cash away, you might be considering a money market account versus a savings account. Thought they have some similarities, they are also different. Here is how a money market account is different from a normal savings account.

What Is a Money Market Account?

A money market account is just another kind of savings account. Although they both are limited by six withdrawals or transfers per payment cycles, they are really suited for different purposes.

Savings accounts come in two different forms—passbook and statement. A passbook account is generally used by making deposits in person at a bank branch and the statement is recorded in your passbook. A statement savings account is probably one you are more familiar with. It allows you the option to withdrawal via ATM, and your statements can be accessed by mail or made available electronically. The reason why you are more familiar with the latter is because statement savings accounts have taken over passbook accounts, which were more common a few decades ago.  

A money market account usually has a higher yield interest rate. They usually allow you to write checks, which the other accounts typically don’t allow. For the most part, the basic difference is as follows: a savings account is if you want to store some quick cash in case of an emergency. A money market account is more long term and allows you to make more money off a higher interest rate.

Things to Look for When Shopping for A Money Market Account

When you are looking for the best financial institution to open your money market account, you should consider a few things. The withdrawal limit is a federal regulation, so there is no way around that. However, you can look at what institutions are offering the best rates as your key criteria.

Many people overlook online financial institutions. Most of us think of brick and mortar banks first, but there are also a lot of great FDIC insured institutions on the internet that offer very competitive rates such as Ally and Barclays. Keep in mind wherever you decide to place your money, you should always be on the hunt for the best rates. More often than not, the rate you start out with will probably end up going down as the bank starts rolling back the deal they were offering when you signed up.